Romania's PSD Unveils Progressive Tax Plan: Will it Replace VAT Hikes?

Romania's PSD Proposes Progressive Tax to Avert VAT Hike Romania's Social Democratic Party (PSD) has proposed a new progressive tax system as an alternative to increasing the Value Added Tax (VAT). The proposal, announced by PSD leader Sorin Grindeanu, suggests a 20% tax on salaries exceeding 12,000 Romanian lei (approximately 2,400 Euros). Grindeanu claims this measure aligns with recommendations from both the International Monetary Fund (IMF) and the European Commission. He stated, "Impozitarea progresivă este cea mai eficientă măsură pentru a nu crește TVA!" (Progressive taxation is the most efficient measure to avoid increasing VAT!). The party projects this tax could generate an additional 12 billion lei for the national budget. The PSD aims to implement this change as early as July 1st. However, the proposal excludes low and middle-income earners from this taxation, and the party remains opposed to a tax on banking transactions. A spokesperson for the Ministry of Finance stated that the proposal is currently under review. The IMF and European Commission have yet to publicly comment on the PSD's specific proposal. The coming weeks will be crucial as the Romanian government weighs the potential economic and social impacts of this significant policy change. The proposal highlights the ongoing debate surrounding fiscal policy in Romania and the search for sustainable solutions to manage the national budget.